Financial Analysis for Fair Value Measurement -myassignmenthelp

Question: Discuss about theFinancial Analysis for Fair Value Measurement. Answer: Multinational companies can affect their financial position by applying the hedging strategies that can affect the overall risk position of the company. There are many ways of hedging that can be applied that includes both long term hedging techniques and short-term hedging techniques. Long term techniques include two-way currency swaps, one that occurs at the time of inception of the loan contract and one that happens with the banks when the swaps gets multiplied(Dichev, 2017). It all depends on the prevailing market rates if these swaps would be profitable or not and whether it would increase or decrease the risk element for the multinational companies. In case of hedging the companies are securing themselves against a negative event that might occur, given the overall scenario in which the interest rates might increase or decrease. The main aim of the company should be to make sure that when they are going for any swap option that involves higher currency exchange rates difference they must choose such counter parties in which the overall risk element is low(Abbott Kantor, 2017). The future markets should be analyzed beforehand so that in situations where there are higher risk elements present the company can necessary steps beforehand. The company must always take expert advices when going for such hedging options, this will help them in securing themselves against unforeseen situations in which the overall rates might increase. A lot depends on the economic conditions of the country whether or not the hedging would be beneficial or not for long term success(Alexander, 2016). References Abbott, M., Kantor, A. (2017). Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian accounting Review. Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-431. Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617-632.